Outcry as Senate Pushes Tax Hike on Soft Drinks

A strong wave of public and economic criticism has greeted the Nigerian Senate’s initiative to significantly increase excise duty on non-alcoholic beverages. Economists and concerned Nigerians have vehemently rejected the tax proposal, warning of widespread negative consequences.

Dependable NG reports that the controversy stems from the Senate Committee on Finance’s effort to amend the current Sugar-Sweetened Beverage (SSB) tax. The existing law imposes a fixed N10 duty per liter under Section 21(3) of the Customs and Excise Tariffs Act. The amendment bill, sponsored by Senator Ipalibo Harry Banigo, seeks to transform this fixed rate into a percentage-based levy calculated on the final retail price, with the generated revenue slated for the health sector.

The Centre for the Promotion of Private Enterprise (CPPE) was among the first groups to publicly urge the Senate to abandon the plan. The CPPE argued that the move would inevitably trigger the shutdown of manufacturing plants, lead to a fresh surge in consumer prices, and result in massive job layoffs across the beverage production and distribution network.

This sentiment was strongly echoed by financial experts. In separate interviews conducted with leading financial commentators, Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers, and university don Prof. Godwin Oyedokun both joined the CPPE in condemning the proposed increase on non-alcoholic beverages.

Mazi Okechukwu Unegbu lamented the existing hardship and the heavy burden of multiple taxation already being borne by Nigerians. He strongly recommended that any plans for additional tax increases should be suspended by the federal government. He stated that the government must demonstrate sensitivity to the economic plight of its citizens: “They should not kill Nigerians with taxes all over the place. They should be able to be reasonable in terms of their proposals. So for now, I will recommend that the government should not increase any tax for now,” he advised.

Economist and public finance expert, Prof. Godwin Oyedokun, issued a cautionary statement to the Federal Government. He warned that the proposed tax hike risks worsening inflation, crippling struggling small businesses, and undermining already fragile household incomes. Oyedokun noted that the proposal generates widespread concern because it targets products—soft drinks, flavored beverages, and energy drinks—that are consumed daily by millions, often serving as low-cost alternatives for families battling rising food prices.

The economist stressed the dire economic implications. The first consequence would be an immediate rise in retail prices as manufacturers pass the additional tax burden directly to consumers. “Households already battling high inflation will feel the squeeze, especially low-income earners, students, artisans, and families with children,” Oyedokun cautioned. Furthermore, reduced sales volumes could lead manufacturers to cut production and ultimately result in job losses across the entire value chain. Oyedokun also questioned the revenue generation premise, arguing that consumers often switch to cheaper, informal options when prices rise, thereby undermining the government’s projected fiscal gains.